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On Tuesday, Senate Democrats distributed an update to the controversial IRS reporting requirements that the credit union industry has been very vocally opposed to since it was unveiled in late June.
According to the updated proposal rolled out Tuesday, it would require financial institutions to report inflows and outflows of personal and business accounts, as well as transfers between accounts of the same owner, if it is more than $10,000 per year. The proposal floating around for the past four months had the threshold at $600 per year.
The requirements do not apply to payroll deposits for wages or to those receiving Social Security benefits.
In response to the updated IRS reporting proposal, NAFCU President/CEO Dan Berger said, "It has become abundantly clear that Americans oppose the IRS obtaining additional information on their financial accounts. The updated plan is nothing more than window dressing in an attempt to shore up support for a flawed proposal. Instead of creating financial privacy risks for consumers and adding compliance costs for our nation's community financial institutions, Treasury and the IRS should focus its attention on the data it already has to increase tax compliance."
In a statement, CUNA's Chief Advocacy Officer Ryan Donovan said, "Every time this proposal changes, it gets worse. For the country's minimum wage workforce, there is no fundamental difference between a $600 reporting threshold and a $10,000 reporting threshold. Now proponents expect credit unions and banks to play arbiter, declaring what does and doesn't meet proposed exceptions like wages and down payments. They've just taken something very invasive and made it incredibly more so while turning an average compliance bad dream into a waking nightmare."
He added, "The revised proposal is a huge leap in the wrong direction."
Several dozen credit union, bank and consumer groups have voiced their opposition to any such move by the IRS. At one point last month, it appeared the proposal had died during negotiations with members of the House Ways and Means Committee. However, it was quickly revived inside the full House version of the budget reconciliation bill.
On Monday, NAFCU released a new video explaining the potential ramifications to credit unions of the proposal. In the video, featuring NAFCU Associate Director of Communications Amanda Dela Cruz, she said, "This dramatic change will have the IRS collecting and analyzing your financial transactions. Most Americans would find themselves subject to this new reporting, even at higher thresholds, such as $10,000. "
Cruz continued, "This new reporting requirement would create new compliance burdens for credit unions and data privacy concerns for consumers. You can help stop this proposal before it's too late."
According to the IRS and the Biden Administration, this proposal would not track or analyze individual transactions, as claimed by credit union and banking lobbying organizations.
CUNA and NAFCU stated they would continue pushing back against this proposal throughout the budget reconciliation process.
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
